U.S. Chamber, business groups concerned about farm bill's commodity title

WASHINGTON,
Sept. 16, 2013 – Business and trade organizations are concerned about the
potential for provisions in the farm bill commodity titles to trigger a World
Trade Organization (WTO) dispute – even as lawmakers hope to use other aspects
of the bill to resolve an ongoing trade challenge involving U.S. cotton
subsidies.

The
U.S. Chamber of Commerce, the National Association of Manufacturers and the National
Foreign Trade Council sent a letter to the House and Senate Agriculture
Committee leaders, asking them to guard against a WTO challenge and the
potential for retaliation.

Although
work on a new farm bill has largely been stalled in recent weeks, a formal farm
bill conference could start sometime after House conferees are named – an
action expected after the full House votes on a stand-alone nutrition title
later this week.

“We write
to express our concern that the new Farm Bill may have the unintended consequence
of exposing the United States to the risk of a World Trade Organization (WTO)
finding of noncompliance and sanctioned retaliation that could harm American
farmers, ranchers, workers, and companies,” the groups wrote.

Although
the House and Senate Agriculture Committee staff did not respond to a request
for comment on the letter, House Agriculture Committee Chairman Frank Lucas and
Senate Agriculture Committee Chairwoman Debbie Stabenow have long maintained
that their respective farm bills will be WTO compliant.

The business
groups took direct aim at the Senate’s Adverse Market Payments (AMP) program
and House Price Loss Coverage (PLC) counter-cyclical programs, noting that they
“run the substantial risk of violating obligations the United States has
undertaken as a signatory of the WTO agreements for the same reasons a WTO
panel found the U.S. noncompliant in the U.S.-Upland
Cotton dispute.”

In
particular, they targeted a provision in the House version of the farm bill
that recouples program payments with actual acreage, which “will quickly invite
other nations to initiate dispute settlement against the United States—and do
so with a good chance of success.”

The
issues raised by the business groups echo some of the same concerns elevated
earlier this year in a letter
from the National Corn Growers Association, the American Soybean Association
and the U.S. Canola Association.

The criticism
also reflects bipartisan Senate Ag Committee angst over the commodity title, in
comments filed as “Additional
Views” in the Senate report language filed with S. 954, The Agriculture Reform,
Food and Jobs Act of 2013.

“The reported
bill’s inclusion of AMP and continued use of fixed reference prices for certain
crops creates the risk for future WTO challenges. We are concerned that such challenges
would be likely to be found inconsistent with our WTO commitments, putting the
American economy at further risk from potential retaliation against our exports
or requiring further payments of taxpayer funds to foreign agricultural
industries,” wrote Senators Pat Roberts, R-Kan., John Thune, R-SD, Chuck
Grassley, R-Iowa, Mike Johanns, R-Neb., Joe Donnelley, D-Ind., and Sherrod
Brown, D-Ohio.

“Having reformed
these programs away from market-distorting price fixing just last year, we
should not consider reinserting such provisions as contained in AMP to be a
reform of our commodity support policies,” the six senators noted.

Brazil
initiated a case against the U.S. cotton and GSM-102 programs in 2002 and won a
WTO challenge that includes the right to impose $830 million in retaliatory
tariffs on U.S. goods while U.S. lawmakers work on crafting a new farm bill
solution. In the interim, the U.S. government pays $147.3 million annually to
the Brazilian Cotton Institute.

The three organizations
relied on an
analysis by law firm White & Case, which compared and contrasted the
House and Senate farm bill provisions with WTO decisions made in the U.S.
cotton case initiated by Brazil.

The analysis noted that the House PLC
program “is highly problematic from a WTO perspective” but didn’t rule out
potential WTO challenges to the Senate’s AMP program.

“Because payments under the AMP
program would not be coupled to production acres, there is a smaller risk both
that other WTO Members would challenge it and that a panel would conclude the
program is inconsistent with U.S. obligations under the SCM Agreement. That
said, it is important to bear in mind that AMP program would be similar to the
current CCP

program, which was successfully
challenged by Brazil with respect to cotton.”

This week’s guest on Open Mic is Ken Dallmier, President and COO of Clarkson Grain Company. While the global grain business is dominated by supply, demand and now trade wars, this Illinois-based company functions under a customer-focused mindset. Dallmier says this generation of consumer demand is dominated by a different set of social values leading to questions over the way food is produced and the prices they’re willing to pay. Sustainability, organic and non-GMO are providing farmers an income stream isolated from traditional market forces.

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The world of agriculture extends beyond what’s growing in your field or living in your barn, and here at Agri-Pulse, we understand that. We make it our duty to inform you of the most up-to-date agricultural and rural policy decisions being made in Washington D.C. and examine how they will affect you – the farmer, the lobbyist, the government employee, the educator, the consultant and the concerned citizen.